Waxman-Markey Cap and Trade Will Pay For Itself, CBO Finds

September 10th, 2009 by Susan Kraemer

The Waxman-Markey Climate Bill uses Cap and Trade to get our current 6 billion tons of CO2 a year down to just over 5 billion tons a year by 2020 (20% by 2020) and continuing down further by 2050.

The Congressional Budget Office has estimated that the auction proceeds of the current Cap and Trade bill would increase Federal revenues by about $846 billion by 2019.

That would more than fund the $821 billion in renewable energy spending that it will take (per the CBO) to reduce the national carbon footprint by almost a billion tons a year on deadline, and would leave $25 billion in the bank for additional renewable energy projects.

This revenue would fund programs that reduce carbon emissions and that cut the cost to individuals and businesses. Some examples over the jump:

Provide energy tax credits or energy rebates to small business and low and middle income families to offset the impact of higher energy-related prices.
Require utilities to buy an increasing percentage of energy from renewable power and provide assistance like loan guarantees for clean energy projects.
Fund research and development of technologies related to carbon capture and sequestration.
Fund $25 billion in DOE loans to automobile manufacturers and component suppliers under the current Advanced Technology Vehicle Manufacturing Loan Program.
Establish a Clean Energy Deployment Administration (CEDA) within the Department of Energy (DOE), which would be authorized to provide direct loans, loan guarantees, and letters of credit for clean energy projects.
Authorize the Department of Transportation to provide individuals with vouchers to acquire new vehicles that achieve greater fuel efficiency than the existing qualifying vehicles owned by the individuals.
Authorize appropriations for various programs under EPA, DOE, and other agencies.

According to the Congressional Budget Office, Waxman-Markey would cover about 72% of US emissions initially and by 2020 that would be up to 86 percent. The initial auction reserve price for carbon would be $10 a ton; stepping up to $15 by 2020 (and on up to $64 a ton by 2050.)

Cap and trade offers maximum flexibility, clear and feasible goals, and a predictable time-line:

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Tags: 6 billion tons of CO2 a year, by 2020, Congressional Budget Office, guaranteed results (Cap) with flexible means (Trade), offset the impact of higher energy-related prices, Waxman-Markey Climate Bill

About the Author

Susan Kraemer writes at CleanTechnica, CSP-Today, PV-Insider , SmartGridUpdate, and GreenProphet. She has also been published at Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times. Follow Susan on Twitter @dotcommodity.

http://www.globalwarmingisreal.com/blog Tom

This whole “communist” and “socialist” rhetoric is so tiring and ignorant.
http://www.globalwarmingisreal.com/blog Tom

This whole “communist” and “socialist” rhetoric is so tiring and ignorant.
Ted

M. jones – Good to see conservatives embracing intelligence and rational thought. When Glenn Beck comes TV on do yourself a favor and turn it off. I am so glad I left America. The stupidity is mind boggling OBAMA IS A SOCIALIST! Take a civics course or better yet grow a brain. I’m guessing a Christian home school education
Ted

M. jones – Good to see conservatives embracing intelligence and rational thought. When Glenn Beck comes TV on do yourself a favor and turn it off. I am so glad I left America. The stupidity is mind boggling OBAMA IS A SOCIALIST! Take a civics course or better yet grow a brain. I’m guessing a Christian home school education
Susan Kraemer

@James – interesting perspective.

“Power companies need not use less or cleaner forms of fossil fuel under a cap and trade program. They will just pay a higher price for their use of traditional fuels.”

Yes. In the uproar over Cap and Trade – that gets missed.

“These costs will be passed on to their customers. Carve outs for citizens for recovery from price impacts are in the current bill that is before the Senate.

This will lessen the financial impact on individuals.”

Yes, this too. 76% of the benefits of Cap and Rebate” aspect of trade go to individuals as rebates and subsidies to reverse the cost increases in electricity if their utility won’t buy renewables.
Susan Kraemer

@James – interesting perspective.

“Power companies need not use less or cleaner forms of fossil fuel under a cap and trade program. They will just pay a higher price for their use of traditional fuels.”

Yes. In the uproar over Cap and Trade – that gets missed.

“These costs will be passed on to their customers. Carve outs for citizens for recovery from price impacts are in the current bill that is before the Senate.

This will lessen the financial impact on individuals.”

Yes, this too. 76% of the benefits of Cap and Rebate” aspect of trade go to individuals as rebates and subsidies to reverse the cost increases in electricity if their utility won’t buy renewables.
James

As the President of a rural electric cooperative I have been following this discussion from its beginning. From my understanding of the situation I am prepared to say that cap and trade works as an incentive to produce emissions-free energy. The externalities of fossil fueled power are not being included in the equation of the costs of power today. Cap and trade makes these costs real and requires a response to them. Power companies need not use less or cleaner forms of fossil fuel under a cap and trade program. They will just pay a higher price for their use of traditional fuels. These costs will be passed on to their customers. Carve outs for citizens for recovery from price impacts are in the current bill that is before the Senate. This will lessen the financial impact on individuals. Conservation measures will be implemented by large users who do not fully recover costs. Excessive use of energy is rampant in our country so conservation is not only possible but appropriate. At the utilities we are preparing our members for impacts from cap and trade by educating them on energy conservation and efficiency and by offering them programs that will help with the implementation of such measures. Our board of directors and management team understand that we have a duty to provide energy to our members but we also have a moral responsibility to not harm them in the process. We further understand that discussions of economics are secondary to discussions of human health and the protection of the biodiversity of the world upon which all of our natural and man-made systems rely.
James

As the President of a rural electric cooperative I have been following this discussion from its beginning. From my understanding of the situation I am prepared to say that cap and trade works as an incentive to produce emissions-free energy. The externalities of fossil fueled power are not being included in the equation of the costs of power today. Cap and trade makes these costs real and requires a response to them. Power companies need not use less or cleaner forms of fossil fuel under a cap and trade program. They will just pay a higher price for their use of traditional fuels. These costs will be passed on to their customers. Carve outs for citizens for recovery from price impacts are in the current bill that is before the Senate. This will lessen the financial impact on individuals. Conservation measures will be implemented by large users who do not fully recover costs. Excessive use of energy is rampant in our country so conservation is not only possible but appropriate. At the utilities we are preparing our members for impacts from cap and trade by educating them on energy conservation and efficiency and by offering them programs that will help with the implementation of such measures. Our board of directors and management team understand that we have a duty to provide energy to our members but we also have a moral responsibility to not harm them in the process. We further understand that discussions of economics are secondary to discussions of human health and the protection of the biodiversity of the world upon which all of our natural and man-made systems rely.
http://cleantechnica.com/ M. Jones

Comrades!

You will receive the Order of Lenin for your efforts in advancing the Communist Cause!

Socialize! Socialize! Socialize!

Altogether Now!
http://cleantechnica.com/ M. Jones

Comrades!

You will receive the Order of Lenin for your efforts in advancing the Communist Cause!

Socialize! Socialize! Socialize!

Altogether Now!
Chris Sharp

I think for the Maxman-Markey bill to be enacted into law and to really become a healthy transition for the U.S. and world economy, the idea of sustainable living will not be anything like it is now. It will become one of the fundamental responsibilities of being human. Right now, the unknowns about exactly what will happen with this Bill is creating a lot of doubt and fear, which is expected. Through millions of frightened people it becomes amplified. We have to face the consequences of this transition with a boldness unlike anything ever seen. The infrastructure to implement renewable energy into the economy is massive and will take a good amount of time. I don’t think it’s going to be painless either, and will probably end up hurting in the short run. However we’re facing a dire future that will hurt like nothing ever felt before if we keep delaying action.

I don’t feel the devil’s in the details at all in this Bill, not one bit. We have the knowledge and ability to make the transition to a sustainable economy. It’s in the attitudes we have. Our attitudes have to change first, or at least be willing to be flexible.

Unfortunately we wait for disasters to happen before we come together as a people – cooperating, sharing, doing whatever it takes and helping out, but that too, we have a choice.
Chris Sharp

I think for the Maxman-Markey bill to be enacted into law and to really become a healthy transition for the U.S. and world economy, the idea of sustainable living will not be anything like it is now. It will become one of the fundamental responsibilities of being human. Right now, the unknowns about exactly what will happen with this Bill is creating a lot of doubt and fear, which is expected. Through millions of frightened people it becomes amplified. We have to face the consequences of this transition with a boldness unlike anything ever seen. The infrastructure to implement renewable energy into the economy is massive and will take a good amount of time. I don’t think it’s going to be painless either, and will probably end up hurting in the short run. However we’re facing a dire future that will hurt like nothing ever felt before if we keep delaying action.

I don’t feel the devil’s in the details at all in this Bill, not one bit. We have the knowledge and ability to make the transition to a sustainable economy. It’s in the attitudes we have. Our attitudes have to change first, or at least be willing to be flexible.

Unfortunately we wait for disasters to happen before we come together as a people – cooperating, sharing, doing whatever it takes and helping out, but that too, we have a choice.
Susan Kraemer

Russ, Stacy, kan, see for solutions to these issues you raise

http://cleantechnica.com/2009/09/11/76-of-cap-and-trade-bill-allowances-benefit-people-not-polluters/
Susan Kraemer

Russ, Stacy, kan, see for solutions to these issues you raise

http://cleantechnica.com/2009/09/11/76-of-cap-and-trade-bill-allowances-benefit-people-not-polluters/
russ

I am not at all arguing for the fossil fuel companies – they will be around far longer than I!

Reduced carbon is necessary but to many people think it is a simple and painless transition – it will not be.

I am simply saying that when market controls force the purchase and additional expenditure on Cap N Trade, money that would normally be spent on household items or food is no longer there.

Also, utility costs such as Cap N Trade are pass throughs – they definitely go to the consumer.
russ

I am not at all arguing for the fossil fuel companies – they will be around far longer than I!

Reduced carbon is necessary but to many people think it is a simple and painless transition – it will not be.

I am simply saying that when market controls force the purchase and additional expenditure on Cap N Trade, money that would normally be spent on household items or food is no longer there.

Also, utility costs such as Cap N Trade are pass throughs – they definitely go to the consumer.
kan

Cap and trade would be the largest disaster our farmers have ever faced.
kan

Cap and trade would be the largest disaster our farmers have ever faced.
Susan Kraemer

Love your comments, Russ, but Cap and Trade does not take money out of the system.

It is just moving money from fossil energy to renewable energy. The money itself stays in the economy; growing a carbon-free economy.

Fossil companies can invest in renewable energy, too, you know.
Susan Kraemer

Love your comments, Russ, but Cap and Trade does not take money out of the system.

It is just moving money from fossil energy to renewable energy. The money itself stays in the economy; growing a carbon-free economy.

Fossil companies can invest in renewable energy, too, you know.
Stacy

This cap and trade bill will cap the emissions, capping emissions means less operation of plants, less operation of plants means less jobs…Not exactly what we need in the middle of a recession. I say no, what do you say? Make your voice heard http://tinyurl.com/klfut8
Stacy

This cap and trade bill will cap the emissions, capping emissions means less operation of plants, less operation of plants means less jobs…Not exactly what we need in the middle of a recession. I say no, what do you say? Make your voice heard http://tinyurl.com/klfut8
Susan Kraemer

“They neglect to ascertain the impact of the extra taxes on the economy as a whole”

No, Cap and Trade is not “taxes”. While there is a Cap on pollution, there’s provisions in the bill to prevent the fossil companies from passing on the costs (to them) of not switching to new renewable energy, but sticking with fossil fuels.

“Saying that it won’t negatively affect the economy is like saying hogwash doesn’t stink.”

It will cut into fossil company profits, but not consumer pockets (because of those consumer protections).
Susan Kraemer

“They neglect to ascertain the impact of the extra taxes on the economy as a whole”

No, Cap and Trade is not “taxes”. While there is a Cap on pollution, there’s provisions in the bill to prevent the fossil companies from passing on the costs (to them) of not switching to new renewable energy, but sticking with fossil fuels.

“Saying that it won’t negatively affect the economy is like saying hogwash doesn’t stink.”

It will cut into fossil company profits, but not consumer pockets (because of those consumer protections).
russ

Susan – Please tell us you don’t mean or believe what you wrote!

Cap & Trade or taxes it is all the same – money out of the system. The provisions to prevent the utilities from passing on the costs are silly and will go away.

The utilities should operate at a loss to allow greens to feel good and happy? Don’t think so.
russ

Susan – Please tell us you don’t mean or believe what you wrote!

Cap & Trade or taxes it is all the same – money out of the system. The provisions to prevent the utilities from passing on the costs are silly and will go away.

The utilities should operate at a loss to allow greens to feel good and happy? Don’t think so.
Ben

The CBO made its constant, foolish mistake that they always make. They neglect to ascertain the impact of the extra taxes on the economy as a whole. This is why they overestimate the costs of tax breaks and overestimate the income of tax hikes.

Nearly a trillion dollars will be removed from efficient, productive businesses in the economy to fund unproductive businesses such as sequestration and inefficient businesses such as wind farms. Saying that it won’t negatively affect the economy is like saying hogwash doesn’t stink.

In medicine, if a doctor downplayed the side-effects of a surgery, calling a near-paralyzed limb a “reduction in dexterity” or even worse, a “reduced pain sensitivity in arm”, they would have thier license revoked for a gross violation of informed consent. We should ask the same honesty of our rulers. This may be necessary, but do not DARE lie about the downsides to cap-and-trade. People need to go into it with their eyes wide open and their rose colored glasses off.
Ben

The CBO made its constant, foolish mistake that they always make. They neglect to ascertain the impact of the extra taxes on the economy as a whole. This is why they overestimate the costs of tax breaks and overestimate the income of tax hikes.

Nearly a trillion dollars will be removed from efficient, productive businesses in the economy to fund unproductive businesses such as sequestration and inefficient businesses such as wind farms. Saying that it won’t negatively affect the economy is like saying hogwash doesn’t stink.

In medicine, if a doctor downplayed the side-effects of a surgery, calling a near-paralyzed limb a “reduction in dexterity” or even worse, a “reduced pain sensitivity in arm”, they would have thier license revoked for a gross violation of informed consent. We should ask the same honesty of our rulers. This may be necessary, but do not DARE lie about the downsides to cap-and-trade. People need to go into it with their eyes wide open and their rose colored glasses off.